New Zealand Institute for the study of competition and regulation inc.

Abstract

Although animal welfare issues have become increasingly important to the economic fortunes of many producers, the interests of animals themselves are absent from standard economic analysis.  By contrast, scholars from other disciplines such as philosophy and law have examined animal issues in considerable detail.  This paper outlines a simple way of formally incorporating the insights of these discipines within a traditional economics framework.  If animals have economic standing, then current practice makes excessive use of animals as production inputs and is thus economically inefficient.  However, efficiency would not, in general, entail zero use.  Optimal usage depends on the costs to animals and the benefits to humans and thus reflects the usual cost-benefit tradeoff inherent in economics.  Even if animals are accorded no economic standing, externalities imposed on human producers leads to similar qualitative conclusions.